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I ran across a really intriguing article by Paul Kasriel--Paradox Squared. Here is a snippet from the last paragraph of the article.
The most rapid real GDP growth we experienced in the 1951 through 2008 period occurred in the 1960s, a period when the consumption ratio was relatively low. My bet is that when we come out of this current deep recession (Q4:2009?), the recovery and expansion will be accompanied by a much lower consumption ratio than we have experienced in recent years and higher export and business capital spending ratios than we have experienced in recent years. But most importantly, I expect that these changing ratios will be accompanied by higher growth in real GDP ex federal government than we have experienced in recent years. Why? Because, as I stated at the outset, the pace of economic growth is a function of productivity and thrift. And no less an authority than the editor of Vogue says that thrift is in vogue again!I believe savings is in vogue right now. I also think savings leads to investment which leads to economic growth.
I wonder what Larry Kudlow would have to say about this?
To read the complete article--Paradox Squared--and see the accompanying chart go here. This is worth reading and considering. If nothing else it is pleasant to think there could be a light at the end of the tunnel.
That is my 92 year old mother, Dorothy, up there on the right. Looks pretty good for her age--don't you think?
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